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Time shares nose-dive in value, so owners are stuck with albatrosses

Time shares are tough to sell, even in the best of times. Now a perfect storm of trouble has turned some of those slices of paradise into albatrosses, making the shared vacation properties and their hefty annual fees nearly impossible to unload and breeding a horde of scam artists preying on motivated sellers.

Nearly 8 million people -- about 7 percent of U.S. households -- own a time share, which is basically a vacation property owned by many people who take turns using it.

The down economy and the fact that the first generation to buy time shares 35 years ago has been retiring means that many people are looking to sell. Craigslist, eBay and specialized listing service Redweek are chock-full of offerings.

But how much they're worth is a different issue. One Florida listing service estimates that most time shares are selling for no more than 10 percent of the original price. Some owners are lucky to get pennies.

"We've never seen the resale market where it is now," said Brian Rogers, head of the Timeshare Users Group, a consumer advocacy group in Jacksonville, Fla., that runs the listing service. Most owners "huff away mad" when told their time share has depreciated like a Yugo, he said.

Then there are the scams.

Resale scammers feeding on desperation have run so rampant that the Better Business Bureau last month named time-share resale swindles as one of the top rip-offs of 2010.

Generally, the swindles go like this: In one, someone tells you they have a buyer lined up, just pay a flat fee. In another, some company says they'll take your unwanted time share off your hands and sell it for an upfront fee that can be thousands of dollars. Many like to advertise by postcard.

Even the top industry group, the American Resort Development Association in Washington, D.C., has issued five consumer advisories on resale scams in the last six months. "In a down market they come out of the woodwork," said President and CEO Howard C. Nusbaum.

Indeed, time-share sales plunged by 35 percent, to $6.3 billion, in 2009, the latest year for which data is available, according to the association. Sales have dropped by 40 percent from the 2007 peak.

Bernie Wiklund hasn't been to his Cape Cod, Mass., time share in nearly seven years. The retired engineer who lives in Ramsey, Minn., is working as a security guard to make ends meet and can't afford to fly out to the cape or fork out $1,000 a year in fees.

He has advertised his two-week time share on Craigslist for nearly six years and has marked it down to $5,000, a fraction of the more than $14,000 he paid in the 1980s. He has received responses, but only from people trying to sell the time share for him -- for a fee. "I'd like to retire," he said. "I'm 72."

The depressed market is great news for buyers, of course. Mike Spillane, 67, picked up his eighth time share weeks ago: a one-week stay in a four-bedroom, four-bath unit in historic Williamsburg, Va. It's a "gold crown rated" unit, referring to a time-share exchange system's top rating, that would cost as much as $30,000 if he bought it directly from a resort developer.

Spillane, who co-owns a small manufacturing company, often uses his time shares to exchange for stays at other resorts. He gives one week each year as a perk to employees and can absorb the $5,000 to $6,000 a year spent in maintenance fees.

"We know if the market doesn't fully recover that we're not going to get a lot of money for some of them," he said. "But we've gotten use out of them for many years."

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